Chrysler Creditors: Approaching the Moment of Truth on Property Rights

Chrysler LLC creditors asked a U.S. Supreme Court justice to block the carmaker from selling its assets as early as tomorrow to a group led by Italy’s Fiat SpA.

Indiana pension funds that lent Chrysler money said in papers filed late yesterday that they will seek a Supreme Court review of a ruling allowing the sale. The funds asked Justice Ruth Bader Ginsburg for an order blocking the transfer until the high court decides whether to hear the funds’ appeal.

“Absent a stay, the sale will close on Monday, June 8, 2009,” the funds said in their court papers, filed in Washington. They said they would suffer “irreparable harm” should the sale go forward.

It is the most important property case since Kelo v. New London, and in some ways more significant, not only because it is larger, but because it will send a poweful message–irrespective of the outcome–as to how U.S. courts handle contracts and obligations.

If our government can by fiat break these, our commercial system will be broken in the process.